The first few year as a start-up entrepreneur are the toughest, not only have I heard this advice from many successful entrepreneurs in Kenya and read it from international entrepreneurs; I have experienced it (and continue to ^_^). Most successful entrepreneurs actually state that the first three to six years are the toughest for any new start-up venture and the entrepreneur behind it. I call them the ‘make it or break it’ years, that’s the time when you are constantly under pressure, stress and many other challenges; both financial and personal. These years not only test your true character but your strength and endurance through very tough challenges and failures that you face. One major challenge that most start-up entrepreneurs face is financial; in both aspects of your personal life and your business. For your personal life; it’s very important to find ways of reducing your expenses to a bare minimum because they can interfere with your business cash flow, especially if that is where you get your money from. I have started up a business twice; I failed the first time I tried for one year and personal finances played a major role in that failure. This time around I have been going for two years and I am applying the lessons I learned from the first time around on saving money as much as I can. There are numerous ways of making sure you save money, but I want to share three easy and very helpful tips of doing so that will guarantee the safety of your business cash flow for the first two years.
1. Reduce all your personal expenses and eliminate all unnecessary ones
If you wish to be successful, you have to be disciplined and start having great control of your spending habits. If you were employed before you became a start-up entrepreneur, such as I was; it can be a great challenge to change your spending habits, however, it is necessary for your success. Reduce any personal expenses such as eating out, going for nights out with your friends, impulsive retail purchases, over-spending on personal items or expenses such as personal phone calls, if you rent your apartment or house – find a more economical, budget-friendly place to stay. You should actually eliminate any expense you feel you can do without or that is a luxury. If you can run your business from home; do that. I moved back home with my mum since there was space to build a bakery workshop in the compound and at the time, the bakery was delivery based, it can run from home to start. Make sure you have very few personal expenses that will need cash; this will stop you from dipping into the business cash flow to fund personal matters.
2. Buy in Bulk
This applies to both your personal and business aspects. Most products or services that are offered in bulk are usually at a lower rate than the ones that don’t. Examples are phone credit (distributors of phone credit sell to shops at wholesale prices for larger amounts, you can do the same as well) and internet bundles (or if you can manage the expense and your area permits it – sign up for monthly internet service e.g. from Zuku or Faiba). If your phone usage is quite high per month, you can also sign up for post paid service; all major phone service providers have post paid bundles and plans – you can even try the business bundles if your phone credit and internet usage is very high. Do the same for your business stock; production, print material (e.g. business cards and brochures), packaging materials and any other purchases you make often. This can apply even to your personal purchases such as toothpaste, deodorant, soap, etc. Visit your local wholesale shop and you will be surprised at how you can save bu buying in bulk.
3. Negotiate deals and discounts with vendors or suppliers
If you make purchases often from specific vendors e.g. print material, production ingredients, etc; you can negotiate certain discounts or deals with that supplier. If you have built a relationship with the vendor; you can discuss different ways in which he/she can discount your purchases because of your loyal service. If you have a supplier who is also a customer as well; you can also discuss a way to trade between the two businesses. Make sure all the details are discussed and if necessary written down, both businesses can benefit from trading items and saving costs in the respective businesses as well.
Those are just a few simple and highly effective ways of saving money as a start-up entrepreneur in Kenya. If you are an entrepreneur who would like to suggest any other ways you have found to save money in your life, please feel free to comment below and share.
Remember to work hard, keep the faith, be strong and work smart!
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